Inventories: Warning Signals

One of the U.S. economy's more reliable
indicators of future trouble is the mercurial behavior of business
inventoriesunsold goods on industrial, wholesale and retail shelves.
Before every postwar recessionin 1948, 1953, 1957 and
1960inventories have soared like Icarus only to plunge as businessmen
liquidated their stocks. Right now, some familiar warning signals are
flying.

Last week the Commerce Department reported that inventories swelled at
the precarious rate of $16.4 billion a year during the final quarter of
1966, thus breaking a record set during the Korean War. The resulting
$135 billion...